Economics professor at Chancellor College a constituent college of the University of Malawi, Ben Kalua, has spoken against industrial strikes that are being held to push for salary increment as a measure to cushion the effects of devaluation.
According to Kalua such demands will only aggravate the country’s economic situation.
“That’s nonsense to me. Let me just give you an example. Suppose everybody gets 50 or 49 percent increase in their salaries or maybe if we cushion against the inflation rate, which is about 19 percent, so everybody gets a 19 percent salary increase then we have not done anything, we are back to square one. In fact there will be worse losers. The majority will lose while some minority could win out of that,” he says.
Kalua says the problems with salary increments is that “everybody will be demanding the same level of imports as before, same level of foreign exchange as before so in that case we have done nothing. And my fear is that it’s worse than doing nothing.
“Or maybe we will go back further than we were before because some people will be gainers and the majority will be losers.”
He explained:“What I am saying is that I also earn an income, which I would also want to be raised but as an economist I realise that if all people got salary increases to match the inflation rate, then we will get back to square one.”
Kalua says the best way would be for the government authorities to re-align the economy towards where it was supposed to have been in the first place.
He says government could have reduced the VAT on some goods, and also create a conducive business environment.
Kalua says devaluation was a necessary evil that could not be avoided.
“I always say that it should be a punishment to politicians for overseeing wrong policies. So they must be punished and their constituents too must being punished for having been consuming some subsidized goods,” he says.